Supplementary pattern: A guide for day traders on the cryptocurrency market
The world of cryptocurrency is known for its volatility and unpredictability and makes it a challenging market for day dealers. However, understanding continuation patterns can provide valuable insights into price movements and help dealers to make well -founded decisions. In this article, we will examine which continuation pattern, how they work, and some important strategies to include them in their trade approach.
What are continuation patterns?
The continuation pattern relate to a certain type of technical analysis pattern that occurs when a trend is interrupted or rejected in favor of another. These patterns are often characterized by a “curved” or curved shape, which indicates that the price tries to break out of an earlier resistance zone or a auxiliary area.
Types of continuation patterns
There are different types of continuation patterns, including:
- Head and shoulders : A classic pattern in which the high and low prices form a “head” or a “shoulder”.
- Reversed head and shoulders
: The inverse version of the head and shoulder pattern, with the “head” lying above the “shoulder”.
- Wavy pattern : A wavy or zigzag pattern that forms when the price breaks out from an earlier resistance zone with increasing dynamics.
- Trend Line Breakout : When a trend line is broken and run new prices.
How to identify continuation patterns
In order to identify continuation patterns, you must analyze various technical indicators, e.g. B.:
- Moving Average values (MAS) : The average price of the coin over a certain period of time can help you identify trends as well as levels of resistance and support.
- Relative strength index (RSI) : RSI measures the size of the latest price changes to determine overbought or oversized conditions.
- Bollinger tapes : These ligaments emphasize the volatility and provide an indication of the market mood.
Key strategies for the inclusion of continuation patterns in your trade approach **
As soon as you have identified a continued duration pattern, you will find some important strategies here to include it in your trade approach:
- Take a profit : Place a level of profit based on the outbreak or if the price reaches a given goal.
- Set a stop loss : Insert a stop loss to a certain price level to limit potential losses if the trend is reversed.
- Commercial duration : Use the continuation pattern as a trigger to enter new shops, e.g. B. purchase or sale of coins based on a specific pattern.
Example of a continuation pattern in action
Let us consider an example by identifying the inverse head and shoulder pattern in Bitcoin (BTC/USD) for 28,000 US dollars. We notice that the price forms a “head” above the previous level of resistance ($ 29,500), followed by a “shoulder” below ($ 27,800). However, if we break out of this pattern, we can use the increasing dynamics and enter into a long position.
Diploma
Continuation patterns are an essential instrument for day traders to get insights into price movements on the cryptocurrency market. By understanding these patterns and involving your trade approach, you can make more informed decisions and increase your chances of success. Remember to always apply risk management techniques and to remain disciplined when entering trades.
Additional resources
For further learning you will find some recommended resources here:
* Cryptoslate : A website that is devoted to cryptocurrency messages, analyzes and knowledge.
* Coindesk : A leading online publication for cryptocurrency messages and trends.
* TradingView : A platform that offers real-time diagrams, technical indicators and trade ideas.
Leave a Reply